Rolland Paper Company Ltd (1972)

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table of contents

Page
Directors and Officers 2and3
Highlights 4
Directors’ Report 6
Financial Statements 14
Notes to Financial Statements 19
Ten-Year Comparative Statistics 22
Auditors’ Report 24

The Annual General Meeting of
Shareholders will be held at the Head
Office of the Company, 800 Victoria
Square, Suite 3620, Montreal, Quebec
at 11:00 A.M., March 29, 1973.

Si vous préférez recevoir votre rapport
annuel en francais, priére d’écrire au
Secrétaire, Compagnie de Papier
Rolland, Limitée, 800, Place Victoria,
Suite 3620, Montréal 115, Québec.

45th annual report

Rolland Paper Company, Limited
Papermaking Specialists

Head Office:
800 Victoria Square, Suite 3620
Montreal 115, Quebec

Sales Offices:
Montreal and Toronto

Paper Mills:
St. Jerome and Mont Rolland, Quebec
and Scarborough, Ontario

directors

Hon. John B. Aird, Q.C. *Lucien G. Rolland, B.A., B.AsSeGaiGre:
Partner, Edison, Aird & Berlis, President and General Manager
Barristers and Solicitors Rolland Paper Company, Limited
Toronto Montreal
*G. Drummond Birks, B.Comm. Marc Rolland

President, Henry Birks Retired Executive

& Sons Limited St. Jerome

Montreal

Olivier Rolland

Paul Chapdelaine, C.A. Retired Executive

Retired Executive Montreal

Montreal

*Joseph A. Weldon, C.A., M.B.E.

E. Jacques Courtois, Q.C. Vice-President and Financial
Partner, Laing, Weldon, Courtois, Consultant

Clarkson, Parsons, Gonthier & Tétrault, | Rolland Paper Company, Limited
Barristers and Solicitors Montreal

Montreal

Richard A. Irwin

Chairman of the Board
Consolidated-Bathurst, Limited
Montreal

Herménégilde A. LeBlanc, C.A.
Secretary, Rolland Paper Company,
Limited

Montreal

*Gérard Plourde, M.Comm.
Chairman of the Board, UAP Inc.
Montreal

*Albert Rolland
Vice-President and Marketing
Consultant
Rolland Paper Company, Limited
Laval *Member of the Executive Committee.

officers

Lucien G. Rolland

President and General Manager

Joseph A. Weldon

Vice-President and Financial

Consultant

Albert Rolland

Vice-President and Marketing

Consultant

Jean-Louis Chollet, Eng.
Executive Vice-President,

Book and Fine Papers Division

Hugh M. Craig, B.Sc., Ph.D.

Executive Vice-President,
Coated Papers Division

Bruno Julien, B.A., M.A., M.B.A.
Vice-President — Personnel

Alphonse St. Jacques, M.Comm., C.A.
Vice-President and Treasurer

Herménégilde A. LeBlanc

Secretary

Michel Gagnon, M.Comm., C.A.

Controller

Transfer Agents
Montreal Trust Company
Royal Trust Company

Registrars
Canadian Trust Company
Bankers Trust Company

Shares Listing
Montreal Stock Exchange
Toronto Stock Exchange

Auditors
Touche, Ross & Co.

highlights

Net sales
Net earnings
Per class ‘“‘A’’ share
Per class ‘‘B”’ share
Dividends on class ‘‘A’”’ and “‘B”’ shares
Per class ‘‘A’’ share
Per class ‘‘B”’ share
Cash Flow
Per class ‘‘A’’ share
Per class ‘‘B”’ share
Book Value per class ‘‘A”’ and ‘‘B”’ shares
Working Capital
Long-term Debt
Capital Expenditures

Voie
$46,437,380
1,388,650
0.73

0.68

160,002
0.10
0.05

2,955,419
1.37
ie32

9.53
9,649,119
7,393,000

635,950

Voie
$41,555,060
1S0s7a
0.05

0.05

1,088,887
0.56
0.56

8.90
8,385,167
7,900,500

297,388

tors ‘report to the sharcholdess

irec

d

ees

directors report to the sharcholders

Sales and Earnings

Consolidated net sales of $46.4 million
were substantially up from $41.6
million in 1971 and reached a new
record level in the Company’s history.
The 11.5% increase in sales revenue
was mostly due to a sizeable increase
in our shipments to the domestic
market and was in line with the
experience of other Canadian

fine paper mills.

Consolidated net earnings of
$1,389,000 for the year 1972 showed
a considerable improvement over
earnings of $150,000 last year. They
represented $0.73 per class ‘‘A’’ share
and $0.68 per class ‘‘B”’ share,
compared with $0.05 per class ‘‘A”’
and “‘B”’ shares in 1971.

Economic Environment

1972 has been an encouraging year.
The Canadian economy recovered
from its depressed state of the
preceding two years, allowing for

a stronger demand for Canadian fine
papers and more stable market
conditions.

The fine paper industry, much like the
rest of the pulp & paper industry, is
cyclical and demand for its products
varies with the economic environment.
A buoyant economy generates more
disposable income, heavier consumer
spending and a stronger demand for

advertising and printing materials.
Throughout 1972, consumption of
writing and printing papers, including
such converting grades as envelope
and register papers, grew 11%.

It is only towards the end of the year
that the stronger demand in the
domestic as well as in the American
fine paper markets resulted in a more
stable price situation.

During 1970 and 1971 Canadian fine
paper manufacturers were faced with
a large inflow of American products.
Some of these were available at prices
substantially below those of Canadian
mills, resulting in a disruption of the
domestic price structure and severe
price competition.

This situation had arisen following

a weakening of the North American
demand for fine papers and an excess
capacity of American mills at a time
when the Canadian market was static.
In 1969, the Canadian government
had fully implemented the 44% tariff
reductions agreed to under the
General Agreement on Tariffs and
Trade, and unpegged the Canadian
Dollar in 1970, making our market
more accessible to foreign
manufacturers.

The recovery of the American
economy in 1972 generated a stronger
demand within the United States and
reduced the availability of products
for export to the Canadian market.
Furthermore, longer delivery dates,
together with higher American prices
and the near parity between the
Currencies of both countries, all
contributed to make American manu-
factured goods less attractive at this
particular time in Canada.

These developments occurred
gradually throughout 1972 benefiting
all of our divisions, especially during
the last quarter.

Book and Fine Papers Division

This division made a strong recovery.
Following a general improvement and
a higher penetration of the Ontario
market, domestic sales increased by
13%. The marketing team was
strengthened; new grades were
introduced to broaden its product line
in offset papers and selective price
increases were announced. Its in-
volvement in the U.S. market was
reduced by 50%.

New contracts were negotiated with
our pulp suppliers and important
savings over the prices paid in 1971
were effected. Higher productivity was
achieved through improvements to our
Nos. 7 and 8 paper machines and

an extension of our on-line control
systems through the use of the
process computer. Furthermore, we
benefited from the aggressive cost
reduction programme effected in

1971 and 1972. The mills in St. Jerome
and Mont Rolland, however, only
operated at an average of 78.3% of
capacity. These factors were respon-
sible for a return on capital employed
which, although still unsatisfactory,

far exceeded that of the two previous
years.

Coated Papers Division
Improvements in manufacturing,
warehousing and marketing
accounted for a turnaround in
this division.

Pursuant to the reorganization of the
Company in January 1972, a separate
sales force was established for the
marketing of coated products. This
approach generated moves to improve
the grade mix and increased the sale
of more profitable grades. New
products were launched and old ones
modified to make our Imperial Offset
the first complete line of No. 1 coated
products in Canada. New inventory

management procedures and a
reorganization of our warehouse
facilities contributed to an improve-
ment in service to our customers.
Programmes to increase productivity
and improve production flow were
implemented.

Wholesale Distributors Division

This division operates two Companies:
Fine Papers, Limited and The Wilson-
Munroe Company Limited in Toronto,
Montreal and Sudbury. It specializes
in the distribution of fine paper and
related products. The overall per-
formance for 1972 was good. Their
sales increased at a rate which
improved their market share.

Fine Papers, Limited is now a
profitable operation and provides
tax savings resulting from a loss
carry-forward.

Financial

During the past year, a combination
of higher earnings and continued
restraint in cash outlays for capital
expenditures and dividend disburse-
ments greatly enhanced the financial
position of the Company, which had
deteriorated in the two previous years.

The cash flow of $2,555,000 was
$1,467,000 higher than in 1971 and
represented $1.37 per class ‘‘A’’ share
mainly as a result of the improvement
in net earnings. It enabled us to add
$1,264,000 to working capital which
stood at $9,649,000 at December 31,
1972. Short-term investment increased
by $906,000 to $1,106,000 while
accounts receivable and accounts
payable increased appreciably with
the larger volume of sales in 1972.

During the recession years of 1970
and 1971, capital expenditures were
drastically reduced. During 1972, the
net amount spent on capital improve-
ments was $564,000, compared with
$270,000 in 1971.

An amount of $434,000 was disbursed
to purchase, for cancellation, $209,500
of the 4%2 % Sinking Fund bonds and
$275,000 of the 534% Sinking Fund
debentures, at a saving of $51,000.

At December 31, 1972, our long-term
debt stood at $7,393,000.

Our investment in 125,000 shares of
Consolidated-Bathurst Limited pro-
duced no income in 1972, but since
last year, prospects of this company
are brighter. After substantial write-
offs, the profits for 1972 showed a
marked improvement. Dividends on
the preferred shares have been
resumed and a reduction of arrears
on these dividends has been initiated.

The market value of this investment
has more than doubled during the
year and stood at $2.1 million at
December 31st. While this is con-
siderably lower than the purchase
price of $5.9 million, no provision has
been taken in our financial statements
to cover the difference between the
purchase price and the market value.
Although nothing precludes the
Company from disposing of this asset,
it has not been regarded as a short-
term investment and accordingly was
never included in current assets.

Your Company’s overall return on
capital employed, defined as the sum
of working capital, investment and net
fixed assets, was 4.7% in 1972. This
rate of return is much improved when
compared to the two previous years,
but it is still well below the 9% level
reached in the early sixties. Therefore,
the increased earnings in 1972 do not
mean full financial recovery and
satisfactory levels of profitability.

Dividends

Payment of dividends on our common
shares, omitted since the previous
payment on September 1, 1970, was
resumed in 1972 with payments of
interim dividends of $0.05 per class
‘A’ shares on August 15th and
December 15th, and of $0.05 per
class ‘‘B”’ shares on December 15th.
Total common and preferred dividend
disbursements amounted to $220,000
in 1972. Rates of dividends will be
reviewed from time to time in the light
of the progress in our profit recovery.
The payment of reasonable dividends
to our shareholders is considered very
important. However, the resources
necessary to a steady expansion of
Our Operations and of our earnings
must be retained in the Company.

10

Personnel ;

This past year was the first under
the new corporate structure which
recognized our coated papers
division, our book and fine papers
operation and our distribution
companies as three independent
profit centres. Such an approach
provided your Company with a much
better control of its investments
through a close coordination of
marketing and production. It also
favoured long-term programmes,
research and product development
and manpower planning. The per-
sonnel of each of these divisions, with
the support of the head office group,
tackled their new objectives with
initiative and efficiency.

A new labour agreement with the em-
ployees of our book and fine papers
division was negotiated for a two-year
period ending April 30, 1974. This met
the needs of the Company for a longer
contract than the rest of the fine paper
industry and reflected the fact that our
employees and their representatives
were fully aware of this necessity.

An unresolved problem is that the
wage rates and fringe benefits paid
in the Canadian fine paper industry
are materially higher than those paid
for corresponding jobs in the U.S.
fine paper mills. This seriously
restricts our ability to compete with

American producers in our own market
as well as in the U.S.A., and our ability
to reinvest larger amounts in the
business.

At date of writing, negotiations with
the hourly-paid employees of our
coated papers division are in progress.
Everything is being done so that a

new satisfactory collective agreement
will be signed shortly.

Environment

Pollution abatement continued to be
One of Our prime concerns. Since
1968, your Company has been actively
involved ina programme of effluent
control at our St. Jerome and Mont
Rolland mills. Substantial improve-
ments have been achieved. The
amount of suspended solids in our
waste water now stands at 1.8% of
production for our St. Jerome opera-
tions and 1.6% for Mont Rolland, as
against the 2% standard established
by the Quebec Water Board. This is
but a first step in our programme.

In anticipation of more stringent
standards, we are now considering
further treatment systems to reduce
the amount of suspended solids.
Estimated costs are $1.2 million which
will bring our total investments to
reduce pollution to more than

$1.7 million.

Such investments for pollution control
will represent increased operating
charges for your Company of more
than $135,000 per year. These are
required at a time when vital expen-
ditures must be incurred to assure our
competitiveness and profitability
within the new situation brought about
by the 1969 tariff reductions. In
assessing these additional operating
expenses, it must be remembered that
the unsatisfactory profit experience of
the past two years made it impossible
to justify the financing of new projects.

This underlines the need for more
comprehensive fiscal and financial
aid programmes to help companies
achieve the desired standards. In this
respect, the industry has made
recommendations to the Government
in order to permit an increased capital
cost allowance for capital expenditures
on pollution abatement. The time
schedule defined by governments

to attain new standards is also of
prime importance.

Outlook

Economic expansion is expected to
continue in 1973. The prospects are
for a buoyant level of retail sales, a
reduction in personal income tax and
sustained real growth. All these factors
have a direct positive correlation on
the increased consumption levels of
fine and printing papers. Industry
sales should reflect this growth and
our mills should operate at higher
levels of capacity. In view of the
depressed conditions of past years,
very few new installations have been
planned and operating ratios should
improve over the next two years. The
possible reduction of the tax rate for
Canadian manufacturing companies
should contribute to improve the
competitiveness of Canadian manu-
facturers. However, the Federal
Government's plan to stimulate
employment through tax reductions
on personal income, and increased
spending could bring a resurgence
of inflationary pressures which might
upset this bright outlook. Cost
increases could outpace our pro-
ductivity and our ability to secure
prices for our products which would
reflect past and future cost increases.
A final but most important factor will
be the policies adopted by the Federal
authorities vis-a-vis our industry.

The relationship between the Canadian
and the American fine paper markets
remains a source of concern for the
long-term profitability of our industry.
This problem having been reported
and discussed at length on several
occasions, it will suffice to underline
that Canadian manufacturers remain
at a disadvantage with their American
competitors whether in the domestic
or in the American market.

11

Canadian production costs are pro-
portionately higher because of higher
wages and shorter runs than those in
corresponding American fine paper
mills. The American manufacturers
enjoy much more effective protection
against imports; they benefit from
special export arrangements such

as D.I.S.C. and their overall tax rate
is lower than the Canadian rate.

It is urgent that we protect more
adequately the domestic Canadian
fine paper industry whether it be
against imports of basic fine paper or,
especially, of printed material, while
maintaining export opportunities.
American authorities are definitely
taking a more rigid stand vis-a-vis
Canadian fine paper imports.

All employees worked in an excep-
tional fashion throughout the year.
Your Directors wish to underline their
record of accomplishment and to
thank them sincerely for the role they
played in moving from the problems
of the last two years to the healthier
position of 1972.

1972 has marked the 90th anniversary
of this Company and its predecessor
in the production and marketing of
fine papers in Canada. Such a long
experience has taught us that only

the best is good enough for our
Customers, Our Suppliers, our em-
ployees and all those who come in
contact with our organization. It is with
that spirit that we are continuing to
tackle the interesting challenges in
our future.

On behalf of the Board of Directors,

ee) een

Lucien G. Rolland,
President and General Manager

Montreal, January 31, 1973

12

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rolland paper company, limited

Statement of Consolidated Income and Expense

Year ended December 31

1972 1971

Net Sales $46,437,380 $41,555,060

Cost of sales 37,728,997 35,787,099

Gross profit 8,708,383 5,767,961

Selling and administrative expenses 4,647,102 3,941,339
Depreciation 1,313,141 1,292,146 ©

Bond interest 435,905 458,691

6,396,148 5,692,176

2,312,235 (oes

Interest and other income 170,571 194,380

Earnings before income taxes 2,482,806 270,165

Income taxes 1,094,156 119,994

Net earnings for the year $ 1,388,650 > °S saa

oo
———— ee

Net earnings per share — Note 9
Per Class ‘‘A”’ share $ \ OER SNe 0.05
Per Class ‘‘B’”’ share 0.68 0.05

14

4
.

tolland paper company, limited

Statement of Consolidated Source and Application of Funds

Source of Funds
Cash flow from operations
Net earnings
Depreciation
Deferred income taxes

Application of Funds
Capital expenditures — net
Long-term debt reduction
Dividends

Increase in Working Capital

Working Capital

Year ended December 31

1972

$ 1,388,650
1,313,141
(146,372)

$ 2,555,419

$ 563,530
507,500
220,437

1,291,467
1,263,952
$ 2,555,419

$ 9,649,119

1971

Di 1501 74
1,292,146

(353,430)

> 1,088,887

& 270,267
124,000
60,435

454,702

___ 834,185
$ 1,088,887

$ 8,385,167

rolland paper company, limited

Consolidated Balance Sheet

assets
At December 31
1972 1971
Current
Cash $ 175,009 $ 241,048
Short-term investments at cost, which is equivalent to market value 1,106,267 200,022
Accounts receivable 6,250,337 4,994,638
Inventories — Note 2 6,986,375 6,716,093
Prepaid expenses 167,854 157,619
14,685,842 12,309,420
Investment at Cost — Note 3 5,862,651 5,862,651

$n OE eee
Fixed

Property, plant and equipment — Note 4 14,008,831 14,758,442

Excess of consideration for acquisition of shares
of subsidiaries over their book value 588,647 588,647

$35,145,971 $33,519,160

On behalf of the Board:
Lucien G. Rolland, Director
J. A. Weldon, Director

liabilities

At December 31

1972 1971
Current
Bank indebtedness, secured $ 403,918 $ 433,206
Accounts payable and accrued liabilities 3,919,146 3,105,601
Income taxes payable 690,659 385,446
Long-term debt instalment due within one year 23,000 oe
5,036,723 3,924,253
Long-Term Debt — Note 5 7,393,000 7,900,500
Deferred Income Taxes 3,696,119 3,842,491
Shareholders’ Equity
Capital — Note 6
Authorized
24,800 Preferred shares of $100 each issuable in one or more series
2,400,000 Class “‘A’”’ and 800,000 Class ‘‘B” shares without
nominal or par value
Issued
14,220 4% % Cumulative redeemable preferred shares $ 1,422,000
1,360,016 Class ‘‘A” and
480,008 Class ‘'B’’ shares 7,162,683
8,584,683
Retained Earnings — For use in the business — Note 7 10,435,446 19,020,129 17,851,916

$35,145,971 $33,519,160

ig

rolland paper company, limited

Statement of Consolidated Retained Earnings

Tee

Year ended December 31

1972
Retained Earnings at Beginning of Year $ 9,267,233
Net earnings for the year 1,388,650
10,655,883

Dividends
Preferred shares 60,435
Class ‘‘A’’ shares 136,002
Class “‘B’’ shares 24,000
220,437

hoa
$ 9,177,497

190,174

9,327,668

60,435

60,435

OT EEE eee

Retained Earnings at End of Year $10,435,446

18

$ 9,267,233

j

tolland paper company, limited

Notes to Consolidated Financial Statements, December 31, 1972

note | Principles of Consolidation

The consolidated financial statements include the accounts of Rolland Paper
Company, Limited and its wholly owned subsidiaries, Canada Glazed Papers
Limited, Fine Papers, Limited and The Wilson-Munroe Company Limited.
The 1971 comparative figures in the Consolidated statement of income

and expense were reclassified to conform with the 1972 presentation.

note 2 Inventories, at the lower of cost and net realizable value

Finished paper and paper in process
Raw materials, wires, felts and supplies
Repair parts and maintenance materials

note b Investment at Cost

This investment consisting of 125,000 common shares of Consolidated-Bathurst
Limited is not considered by the Company to be of a current nature. Market
quotations of $16.75 per share at December 31, 1972 and of $7.875 at
December 31, 1971 indicated values at those dates of $2,093,750 and

$984,375.

Accumulated
note 4 Property, Plant and Equipment Cost Depreciation
Machinery and equipment $25,444,048 $15,606,894
Buildings 6,563,607 3,194,441
Leasehold improvements 202,168 154,262
Water power 300,000 15,000
Land 3 419,605 Ue

$32,979,428 $18,970,597

Depreciation is provided using the straight-line method in the manufacturing
companies and the diminishing balance method in the wholesale distributor

companies.

1972 1971

$ 4,997,437 $ 4,516,047
1,467,527 1,731,141
521,411 468,905

$ 6,986,375. $ 6,716,093
Net Net

1972 1971

$ 9,837,154 $10,400,848
3,369,166 3,520,318
97,906 105,324
285,000 300,000
419,605 431,955
$14,008,831 $14,758,442

SS,

a eee

note § Long-Term Debt

Rolland Paper Company, Limited

First Mortgage Bonds
4V2% Sinking Fund Bonds due January 2, 1975

Deduct

Bonds redeemed and cancelled including $507,000 in
anticipation of future Sinking Fund Requirements.

Sinking Fund Debentures
5% % due July 2, 1984
Deduct

Debentures redeemed and cancelled
including $277,000 in anticipation of future
Sinking Fund Requirements

Deduct

Instalment due within one year included
in current liabilities

$

1974
294,500

300,000

$ 4,000,000

3,507,000

7,500,000

577,000

1975
$ 198,500

300,000

19%2

$ 493,000

6,923,000

7,416,000

23,000

$ 7,393,000

\
\
\

After 1975
$ Aisa

aa ara TN Bs tse UNE Yt Ree ee

Future Sinking Fund Requirements 1973
472% First Mortgage Bonds $ —

5% % Sinking Fund
Debentures 23,000
5 23,000

The declaration of dividends and the redemption of preferred shares of
Rolland Paper Company, Limited are restricted if such declaration or
redemption result in a reduction of the working capital of the Company

to an amount less than $2,000,000.

20

i Ee ae

17a

$ 702,500

7,198,000

7,900,500

—

$ 7,900,500

Total
$ 493,000

6,923,000

ee

$ 7,416,000

——_—_—_—— SESS EE SSS

note © capita

The preferred shares of the 4% % series are redeemable at $104 per share
and are non-voting unless four quarterly dividends are in arrears. Class ‘‘A’’
shares are non-voting unless the Company shall fail, for a period of two
consecutive years, to pay any dividend on such shares.

Class “A’’ shares are entitled to a non-cumulative dividend at the rate of 10
cents per share per annum before payment of any dividend on Class ‘‘B”’
shares. If in any fiscal year dividends at the rate of 5 cents per share per
annum are paid on Class ‘‘B”’ shares, any further distribution in respect of
that fiscal year shall be made equally, share for share, upon all outstanding
Class “‘A”’ and Class ‘‘B”’ shares.

note 7 retained Earnings

An amount of $258,000 of retained earnings is restricted under Section 62 of
the Canada Corporations Act as a result of the redemption of 2,580 preferred
shares in past years.

mote 8 directors’ and Officers’ Remuneration

Aggregate remuneration to persons who served as Directors and as Officers
of Rolland Paper Company, Limited at any time during the year was as follows:

1972 1971

Remuneration paid by: 12 Directors/9 Officers 12 Directors/9 Officers

Rolland Paper Company, Limited $ 32,100 $ 258,800 $ 30,800°s 232) -222)700
Subsidiary Company

Canada Glazed Papers Limited 2,200 — 2,700 a

| S684: 300. 1) $11'\258,800 Si ess SOU cre Gn 2227700

Four Officers were also Directors of the Company in 1972 and 1971.

note 9 net Earnings per Share

The net earnings per share in 1972 was calculated after taking into account
the differential in the dividends paid during the year to the Class “A” and
Class ‘‘B” shares. No dividends were paid on these shares in 1971.

note iO Long-Term Leases

The Company’s commitments under lease agreements of various terms for
property and equipment aggregate $2,288,000 at December 31, 1972. The
annual rentals in 1973 under these leases will be $420,000.

21

ten-year comparative statistics

———__ See

1972
Sales and Earnings
Net sales $46,437,380
Dividend income rig
Depreciation 1,313,141
Bond interest 435,905
Earnings (loss) before income taxes ; 2,482,806
Income taxes 1,094,156
Net earnings (loss) 1,388,650
Cash flow 2,555,419
Percentage of net earnings (loss) to net sales 3.0%
Percentage of net earnings (loss) to capital employed 4.6%
Distribution of Earnings
Dividend on preferred shares $ 60,435
Dividend on class ‘‘A’’ and ‘‘B”’ shares 160,002
Retained in the business 1,168,213
a ea eS ee
Per Share*
Net earnings (loss) per class ‘‘A’’ share $ 0.73
Dividend per class ‘‘A’’ share 0.10
Cash flow per class ‘‘A’”’ share 1.37
Book value per class ‘‘A” and ‘‘B”’ shares 9.53
Financial
Net assets:
Working capital $ 9,649,119
Investment in securities 5,862,651
Fixed assets, net 7 14,008,831
Other assets 588,647
Capital employed 30,109,248
Financed by:
Long-term debt 7,393,000
Deferred income taxes 3,696,119
Preferred shareholders’ equity 1,422,000
Class ‘‘A” and “‘B”’ shareholders’ equity 17,598,129
Total capitalization 30,109,248
Ratio of current assets to current liabilities 2.9:1
Capital expenditures $ 635,950

ae a IR a TTA EIST er iniciiciremrer en re e ia eB EE

Other Statistics

Number of shareholders 2,256
Number of employees 1,294
TED crim eae ee wwe
NOTE:

Results of Canada Glazed Papers Limited are included from February 24, 1964,
results of Fine Papers, Limited from January 1, 1970 and results of
The Wilson-Munroe Company Limited from January 1, 1971.

22

ROTA

458,691

$ 8,385,167

5,862,651 5,862,651
14,758,442 | 15,780,321
588,647 588,647

29,594,907 | 29,982,604

$41,555,060 | $34,084,751 |$35,647,256
ws 125,000
1,292,146 1,206,907

520,189

270,165 2.9195 VF
119,994 1,443,743
LoOy1 7 1,536,074
1,088,887 2,665,881
0.4% 4.3%
0.5% 4.8%

$ 60,435/$ 60,435
534,007 712,009
(1,016,313) 763,630

9 /, 100,985 4% 9'901,323
5,862,651
15,934,251

207,319

31,955,540

1969 |

1968

$34,903,154
125,000
1,216,595
544,214
2,645,318
1,238,949
1,406,369
2,486,965
4.0%
44%

$ 60,435
712,009

633,925

1967

$32,880,771
250,000
1,148,587
569,739
3,612,328
1,723,463
1,888,865
3,061,031
1 Yo
5.9%

61,513
712,009
1,115,343

7,900,500 8,024,500

8,751,000

3,842,491 4,195,921 4,426,044
1,422,000 1,422,000 1,422,000
16,429,916 | 16,340,183 | 17,356,496

29,594,907
Sale|

29,982,604
Pa

3: 297,388'13 693,710
2,320 2,377
1,285 289

31,955,540

$ 841,311

Sos]

2,330
1,288

$ 9,734,780 | $ 9,680,578
5,862,651| 5,862,651
16,176,079} 16,136,194
— 88,662
31,773,510 | 31,768,085
9,255,500| 9,748,000
4,503,144} 4,639,144
1,422,000} 1,422,000
mIB G2 .008 S008 Se!
31,773,510 | 31,768,085
4.2:1 2.9:1
$ 1,261,104 |$ 1,639,203

2,330

1,325

*Net earnings, dividend and cash flow per class ‘‘B”’
share are 5 cents less than per class ‘‘A’’ share
except in 1970 when the differential is 4 cents

and in 1971 when there is no differential.

1966

$29,935,187
262,500
1,072,238
597,001
2,994 320
1,265,915
1,728,405
3,993,637
5.8%
5500

$ 64,993
712,009

951,403

> 9,522,411
5,862,651
1,69 19253
118,848

31,155,163

10,217,000
4,615,565
1,479,000

14,843,598

Sioa, 10S

SN
Stile los4co

1965 1964

$28,290,544 | $26,032,008
184,375

817,640 698,358
638,021 372,386
3,297,750 2,759,939
15312424 1,420,628
1,766,326, Tesgots
4,115,390 2,397,169
6.2% 5.1%
5.8% 6.1%

71,400 71,400

490,507 408,007

1,204,419 859,904

1.00} $ 0.90

0.30 0.30

2.36 1.63

8.02 4.69

$ 8,408,378 | $ 5,542,112
5,862,651 ae

15,500,429; 11,211,744

490,308 5,153,000

30,261,766 | 21,906,856

11,267,000} 11,879,500

3,422,571 1,522,231

1,680,000 1,680,000

13,892,195 6825.02

30,261,766 | 21,906,856

3.6:1 2:37

$ 5,154,185 | $ 3,011,934

2,331

1,121

1965 per share calculated on average number
of shares for the year.

1963

$20,633,530
559,077
144,654
2,586,179
1,310,063
1,276,116
1,948,293
6.2%

9.7%

$ 71,400
408,007
796,709

$ 5,066,795
8,128,535

13,195,330

3,077,000
1,117,600
1,680,000
7,320,730

13,195,330

2.9:1
$ 591,885

1,889
877

23

auditors report
to the sharcholdess

The Shareholders,
Rolland Paper Company, Limited,
Montreal, Que.

We have examined the consolidated
balance sheet of Rolland Paper
Company, Limited and its subsidiaries
as at December 31, 1972 and the
consolidated statements of income and
expense, retained earnings and source
and application of funds for the year
then ended. Our examination included
a general review of the accounting
procedures and such tests of
accounting records and other
supporting evidence as we considered
necessary in the circumstances.

In Our opinion these consolidated
financial statements present fairly the
financial position of the companies as
at December 31, 1972 and the results
of their operations and the source and
application of their funds for the year
then ended, in accordance with
generally accepted accounting
principles applied on a basis consistent
with that of the preceding year.

TOUCHE, ROSS & GO.
Chartered Accountants

haut Alera ‘ bo.

Montreal, Que.
January 29, 1973.

24

tolland and its products

100.4

26

its products

Paper is as old as civilization — as
new as the latest product of 20th
Century research. During this long
span of years, thousands of products
and commodities, once familiar and
essential, have vanished — but paper
remains, its demand increasing

every year.

23.35.
102M

1,000

BLANC -BRILLANT
BRIGHT - WHITE
REF
GRAIN LONG

WHITE

BLANC

all

It is precisely this survival in the face
of centuries of social and economic
change that poses the greatest
challenge to a fine paper manu-
facturer. It is easier, and more
compelling, to respond to radical
changes in technology than it is to
sense the more subtle changes in
customer requirements for a product
that everyone takes for granted, and
to react accordingly.

Rolland has met this challenge in two
basic ways: by being in the forefront
in the technology of production; and
by ensuring, through research, that
the products we manufacture are
those that not only satisfy our
customers’ technical requirements,
but meet, and even anticipate,
changes in demand for specific
grades of paper.

In 1968, Rolland installed the first
on-line production control system by
computer in the Canadian fine paper
industry. This enabled us to turn out
paper of uniform quality, with respect
to such variables as thickness, weight
and moisture content — problems
which have long plagued the printer.

Backing up this technological
leadership is strong emphasis on
customer requirements, and sensitivity
to shifts in the demand for various

28

grades of paper. Some of these
changes are brought about by the
printing industry itself, others by
the influence of designers.

For example, in recent years, printers
have swung over from letterpress to
offset printing. Sensing this change,
Rolland undertook a firm commitment
providing products required for the
offset process. This has found
expression in a number of new brands
— Rolland Offset, Rolland Opaque,
New Imperial Offset Enamel and,
most recently, Rolland Tints. In some
instances, these brands were inno-
vations in their field. The Rolland
family of offset papers now satisfies
the requirements of offset printing.

The recent introduction of Rolland
Tints is an example of response to
designer-initiated change. More and
more, designers are turning to
coloured stock as the nucleus of
new, even startling, innovations in
the graphic arts. To meet their needs,
and to stay in the forefront of this
expanding market, we introduced
this wide new range of coloured
offset papers.

But dedication to the offset market
has inno way made us lose sight of
the more specialized needs of groups
of people within the total fine paper

market. Superfine Linen Record, our
100% rag content bond paper, is still
unquestionably the finest letterhead
paper on the Canadian market.
Rockland Bond, the all-purpose
sulphite bond, satisfies dozens of
basic needs for business and
industry. Dactypost, Canada’s leading
posting ledger paper, is an essential
part of thousands of accounting
systems. Zephyr Antique Book, makes
for the restful reading of novels and
textbooks. Duocoat Label identifies
packages and containers of all kinds.
There is also a wide variety of fancy-
coated and specialty papers of many
kinds — gift-wrap papers for special
occasions and seasons, box-top
papers for packaging merchandise,
and a host of others.

These are just a few of the many
brands that make up Rolland’s full
line of fine papers, coated and
uncoated — our response to a
demand which is over a thousand
years old, and still growing. So long
as the demand for paper endures,
we will continue to meet its require-
ments. In fact, should paper ever be
Superseded by another substance,
we will meet that demand, too — our
real dedication is to serving the needs
of the market.

ee)

30

E SIECLE

DE
IVATION
ESSAI

ikonon Conptantes 177
| i @ YEP

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EBI le
: CANADA ANGLA E
un APFRONTEME N

haeagut so Beton Sars.
eae ie a eee font 2 PEE Soe es Won te ES
vein Nae Tha EASON I. bh Ose gape

INGANIE | JACQUES FE

YRMARS

£ANIM

Gilles Marcotte

TTERATURE |
)UI SE FAIT

Reed pee FeANC Ate

niet task deta ee = P| assent ; : LES TRIBUNAL
: | oe ET LA CO
eee

their uses

A world without paper would be a
world unable to function.

If the statement seems an exaggera-
tion, consider just that situation.
Paper has suddenly, inexplicably,
vanished from the earth. No books

to peruse for pleasure, or study for
self-betterment. No letterhead for
communication. No labels to identify
products. No forms or cards to
activate computers. Think of the
computer in particular. Its technology
is one of the most sophisticated ever
devised by man; yet, deprived of
paper, it would be virtually useless

in its present form.

To appreciate the importance of paper
in your day-to-day life, imagine
yourself, fora moment, as head of

a typical family going about its
business on any typical day.

In the morning, your wife opens up

a can of tomato juice, which is
attractively identified by a colourful
label printed on Duocoat. As she does
so, she is conscious that she has
opened the last can, and reaches

for her shopping memo pad, printed
on Rockland Bond.

Off to work — and you shove a
novel, printed on Belvedere

Opaque Litho, into your pocket for
reading on the commuter train.
Arrived at the office, you go through
the morning mail, which includes
several letters from customers; three
letterheads are on Colonial Bond and
one on Rolland Parchment. You
dictate the replies, and your secretary
types them on your company's
letterhead, which is printed on
Superfine Linen Record.

Turning to a pile of orders, detailed
on inter-office forms printed on
Rockland Bond, you pass them for
processing through the accounting
department, where they are machine
posted on Dactypost. Later, at lunch,
you choose from a menu printed on
Rolland Offset.

31

‘a Camporlts

ag

CVA

CSA ok SR
PAA SSS 94 BAL ER,

a ai

Meanwhile, let’s look at your son who
is an art director in an advertising
agency. One of the agency’s clients
has called for a sharp, ultra-modern
design for its annual report; and he
experiments, to his own satisfaction,
with Imperial Cover Stipple for the
cover, Rolland Opaque for the
non-financial section, and Rolland
Tints for the financial section.

Another son has even closer contact
with Rolland papers. As press foreman
in a printing shop, he uses a variety

of them daily in many kinds of

printing jobs — from sales brochures,
to annual reports and product labels,
among others.

Your daughter in her last year of high
school constantly refers during the
day to her history, math and science
textbooks, printed on Belvedere
Opaque Litho, and Cashmere Book.
After classes she helps print the
itinerary for the ski weekend on a
spirit duplicator, using Rolland
Duplicating.

Once the family had all left, your wife
could turn her attention to wrapping
your daughter's birthday presents,
using some attractive gift-wrap made
by Rolland’s Coated Papers Division.
The mail brought two advertising
circulars, printed on Rolland Offset;
the new fire insurance policy, printed
on Colonial Bond; and a message

33

34

from one of the candidates for mayor
in the next election, run off on an
electrostatic copier, using Rolox
Copy paper.

In the evening, after dinner, you and
your wife spend an hour poring over
travel folders. You find it hard to make
a choice — the full-colour pictures

all look so inviting printed on Imperial
Offset Enamel.

Before calling it a day, you get in
another hour reading your pocket
book, while your wife gets started on
a new Canadian novel — a hard-back
edition printed on Cashmere Book,
borrowed from the local lending
library.

During this single day, you and each
member of your family were in direct
or indirect contact with Rolland
papers up to half a dozen times.

Yet only your sons, because their
jobs required it, were in any way
conscious of that fact.

It is this ubiquity of our products, and
the wide variety of essential functions
they make possible while remaining
anonymous, that makes our business
such a satisfying one to be in. It is
also — in a sense — a responsibility
that we assumed when we first began
making paper. Those who use our
papers can, and do, take their quality
for granted. We cannot — and never
will.

35

The cover of the Report is printed on
Imperial Litho, White, Basis 420M,
and the inside sections, on Imperial
Offset Enamel, White, Basis 160M
and Rolland Tints, African Tan,
Basis 140M.

eS ee eee

SE